When One Uses the After-Tax Weighted Average Cost of Capital

question 79

Multiple Choice

When one uses the after-tax weighted average cost of capital (WACC) to value a levered firm, the interest tax shield is

• A)not accounted for by the use of the WACC.
• B)considered by deducting the interest payment from the cash flows.
• C)automatically considered because the after-tax cost of debt is included within the WACC formula.
• D)capitalized by the levered cost of equity.

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